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Case Title:

Air Deccan (A): The Captain's Cocktail

Publication Year : 2007

Authors: Sai Prasanna, Rajendar Singh Rathore

Industry: Transportation

Region:India

Case Code: COM0178

Teaching Note: Available

Structured Assignment: Available

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Abstract:
The case study tracks the journey of Air Deccan, a pioneer low-cost carrier (LCC) in the Indian skies since 2003. With a passion for reaching out to the common man and a vision of making every Indian fly, Captain G. R. Gopinath built Air Deccan - blending his experience in aviation with an emotional connection to reach down into the society. Despite its initial success in revolutionising Indian civil aviation with its significantly lower fares, Air Deccan was mired in continuous losses - owing to technical and operational snags, coupled with aggressive expansions. The expansion came in for a scathing attack from various quarters including airline industry experts in India. Thereby, given the cost complexities, industrial constraints and competitive scenario in the Indian aviation industry, can Air Deccan revive its profitability with relentless low fares and sustain competition in the long run?

Pedagogical Objectives:

  • To discuss Air Deccan's business model as an LCC in the Indian civil aviation
  • To identify the factors that led to Air Deccan's losses and analyse whether they are controllable or not
  • To critically examine the value chain and cost structure of Air Deccan's operations
  • To analyse the options for Air Deccan's survival, amid financial crunch and operational inefficiencies.

Keywords : Low-cost Carriers (LCCs); No-frills service; Managing in Troubled Times Case Study; Traditional Network Carriers; Global Civil Aviation; Profitability vs Expansions; Value Chain Analysis; Load factor and capacity utilisation; Operational efficiencies; Cost structure analysis; Price wars; Financial crunch; Competition; Business model; Industrial constraints; G.R. Gopinath

Contents : 
Competition and Future Outlook
Global Civil Aviation and its Impact on Indian Airline Industry
Market Penetration of LCCs based on Passenger Volumes
Air Deccan and its Low-cost Model
Air Deccan vs Other Airlines in Southern India
Air Deccan’s Logo and the Common Man
Cost Structure of a Full-service Carrier and an LCC in India
Comparison of Fares between Air Deccan and its Competitors

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